Insto roundup: China regulators seize four insurers; Korea asset owners seek offshore alts
AUSTRALIA
The returns of superannuation fund Hostplus fell into the negative over the 2019 financial year, according to data from SuperRatings.
The statistics, measuring the top-10 balanced funds across the 2019 financial year against results for the past decade, showed Hostplus' 12-month return was -1.7%. That is a harsh contrast to the super fund's 10-year return of 8.6% and follows criticism of Hostplus's investment strategy, which is focused largely on illiquid, growth ventures.
Source: The Australian Financial Review
Industry superannuation funds Cbus and Media Super have started due diligence on a potential merger to create a fund worth A$60 billion ($42 billion).
Currently valued at A$5.9 billion, Media Super ran a tender process to find a suitable partner earlier this year and came up with the A$54 billion Cbus, after rejecting overtures from A$180 billion giant AustralianSuper.
Together, the funds representing the media and construction industries will serve more than 800,000 members. If all goes well in that process, the merger is planned to be completed by 2021.
Source: The New Daily
The Australian Prudential Regulation Authority's move to name and shame poorly performing funds with the release of its ‘MySuper HeatMap’ last December has led to lower management fees.
Apra found that funds servicing 6.1 million members of MySuper default funds, or 42% of the market, had reduced account fees by a collective A$110 million a year.
Source: The New Daily
A second wave of Australian super funds drawdowns has increased concerns that people who are desperate for cash due to the Covid-19-fuelled recession are draining their entire retirement savings.
Super funds received more than 340,000 applications in three days from people who wanted to make a second withdrawal from their superannuation accounts under rules allowing early access to retirement savings due to the coronavirus crisis.
Statistics released by the prudential regulator on Tuesday show that applications to crack open super accounts surged as the new financial year ticked over at the start of the month.
Source: The Guardian
CHINA
Chinese financial regulators on Friday (July 17) took over nine financial institutions, including four insurers, which they said broke rules and added risk to a financial system facing increasing headwinds from the coronavirus pandemic.
The takeovers included Huaxia Life Insurance, Tianan Life Insurance, Tian An Property Insurance and Yian Property Insurance. The China Banking and Insurance Regulatory Commission and China Securities Regulatory Commission also seized control of two trust firms and three securities companies.
The takeovers will last one year until July 16 next year and are aimed at ensuring “stable operations” at the firms.
Sovereign wealth funds have benefited from globalisation, but with globalisation under attack, they may be set to see their influence curtailed – especially those at the centre of rising geopolitical tensions, such as China Investment Corporation.
The growing tension between Beijing and much of the West might make foreign governments think twice before taking their cash.
Other SWFs, meanwhile, may benefit – the likes of, say, Abu Dhabi Investment Authority or Norway’s oil fund. With the West likely to be pretty skint post Covid-19, they might end up with little choice but to accept money offered by (more benign) foreign governments.
Source: Financial Times
HONG KONG
Hong Kong employers may have to restructure their pension packages after lawmakers amended rules for the HK$332 billion ($42.4 billion) Occupational Retirement Schemes Ordinance (Orso).
The Hong Kong Legislative Council on June 17 passed an amendment to the law governing Orso, Hong Kong’s largest retirement plan after the HK$867 billion Mandatory Provident Fund (MPF), to improve governance and prevent misuse. Among other things, employers will now have to submit an annual statement to the MPF Schemes Authority, supervisor of the Orso and MPF, to confirm that schemes are genuinely employer-based.
The changes, which became effective on June 26, may increase operating costs for employers and push more companies to combine their retirement plans under the MPF platform, said Janet Li, wealth business leader for Asia at Mercer.
Source: Asia Asset Management
KOREA
Korea Investment Corporation (KIC) entered into an agreement with the National Agricultural Cooperative Federation (NACF) on July 13 to establish a $400 million joint venture for global private equity investments.
The venture consists of contributions of $300 million from KIC and $100 million from the NACF.
The agreement was a follow-up to a memorandum of understanding for overseas investments signed by the two institutions in May of last year. KIC and the NACF had agreed to lay out the groundwork for investment procedures, investment targets and private equity deals. The parties will collaborate in a variety of ways, with their first investment expected this year.
The move comes as the regulatory Financial Supervisory Service steps up scrutiny of offshore alternative investments led by domestic brokerage companies and asset managers. The regulatory move, triggered after some real estate funds incurred heavy losses on foreign investments, is likely to drive Korean pension plans to turn to global asset managers for overseas investment.
In April, KIC revised internal rules to replace due diligence on investment targets with video conferences or conference calls in cases where physical visits are not allowed, a KIC source said on July 16. The Korean Teachers’ Credit Union has recently drawn up a new guideline on overseas alternative investment to conduct due diligence via video conferencing platforms on commitments to global blind pool funds.
Source: Korean Investors
CVC Capital Partners raised more than $175 million from three South Korean pension plans for its record $24 billion buyout fund, namely the National Pension Service (NPS), Korean Teachers’ Credit Union (KTCU) and the Public Officials Benefit Association (Poba).
For its eighth buyout fund, which closed at €21.3 billion ($24 billion) early this month, CVC has secured $100 million from NPS, $75 million from KTCU and an unspecified amount from Poba, according to investment banking sources on July 15.
It was the first time for KTCU and Poba to participate in CVC’s buyout fund. The European private equity firm had already commitments from the NPS and the Korea Investment Corporation (KIC) in South Korea in the past. It is not yet known whether KIC participated in the latest fund.
Source: Korean Investors
The ESR Australia Development Partnership has bought the 79-hectare site in Southeast Melbourne to be developed into a logistic hub with an expected end-value of around A$450 million.
IPE Real Asset understands that with the last acquisition, the A$1 billion partnership has, so far, allocated A$400 million in equity to buy four sites.
Source: IPE Real Assets
Mumbai-based Mindspace Business Parks Reit, a real estate investment trust sponsored by K Raheja Corp and private equity firm Blackstone, raised Rs11.25 billion ($150 million) from a consortium of investors, which includes Singapore sovereign wealth fund GIC, ahead of its initial public offering.
The Reit allotted 40.9 million units to a handful of foreign institutional investors including GIC at Rs275 per unit, according to the offer document. GIC and US fund house Capital Group each acquired Mindspace Reit units worth Rs450 crore.
Source: VCCircle
UK-based Glympse Bio raised $46.7 million in an oversubscribed series B funding round from a slew of investors, including Singapore state investor Temasek. The investment from Temasek marks a continuation of the fund's interest in biotechnology investments.
Venture capital firm Section 32 led the round, with participation from new investors including Temasek, DNS Capital, New Leaf Venture Partners, Waterman Ventures and Catalio Capital Management, the statement said.
Source: Nikkei Asian Review
INTERNATIONAL
US pension fund San Francisco Employees’ Retirement System has committed $75 million to Hong Kong-based SSG Capital Management’s SSG Secured Lending Opportunities III fund.
Source: DealStreetAsia
The 100 largest public defined-benefit pension plans in the US bounced back after a dismal first quarter to recoup $308 billion in asset value to raise their estimated funded ratio to 71.2% at the end of June from 66% on March 31, according to consulting firm Milliman.
Milliman attributed the gains to investment returns of 10.7% for the second quarter, nearly negating the 10.8% loss in the first period.
Source: Chief Investment Officer